A week before Croatia joined the EU 1st July 2014, its central bank governor, Boris Vujcic, expressed the desire to see his country become a euro-zone member as rapidly as possible. According to him this might be possible by 2017-18.

At this juncture it appears absolutely premature to speculate on the entry of Croatia into the euro-zone, which it must do when the conditions are ripe for it.

The country joins the EU in anything but good shape. Its economy has been in recession during the last five years. It continues to suffer from profound structural weaknesses, 20 per cent unemployment, inadequate competitiveness, rampant corruption, poor collective bargaining framework, and not even a fully independent judiciary.

Its central bank discount rate stands at a high seven per cent, compared to the ECB rate 0.5 per cent. Its credit rating is no more than BBB.

Its public debt is just below the EU 60 per cent threshold of GDP, comparable to other Balkan countries. But as we have seen in other EU countries during the last years that may change rapidly.

Croatia should therefore focus on its economic, administrative and financial reforms before daring to enter the single currency area with its formidable constraints. Fighting corruption and implementing its EU commitments should be its overriding priorities in the years to come.

For the rest, the government would be well advised to take lessons from the way in which the three Baltic countries have overcome their crippling economic crisis and prepared for introducing the Euro.

Comments

There is absolutely no benefit for the EU in joining the EU: just another burden on top of the previous admissions of Romania and Bulgaria which none of us wanted to join any way. Now we will have the added problems of Croatia’s poor attempt to get through the jobs loopholes we saw the Polish and Lithuanian Estonian and Latvians extort to their own benefit.

The only country we all need in the EU is Turkey: and it has been stopped endlessly through no reasons of reality. Of course the Armenian issue is around but then the GENOCIDE in the BALKAN STATES was more recent and still no one in those countries admits it. (They behave like the residents near I G Farbin immune to knowing what went on but were aware all the time.)

What a pity that we now have Croatia and what a pity they cannot be booted out as from tomorrow.

Carol
Thanks for your comments. I can absolutely not agree with your unqualified comments that are not related to my blog which only deals with Croatia joining the euro zone which it will have to do in due time.
Eberhard Rhein

Thoughts on energy and climate, the Mediterranean and whatever comes to mind.

About: Rhein on Energy and Climate

Eberhard Rhein has devoted most of his life to European and global issues. During the 1980s and 1990s, he served successively as chef de cabinet to the Commission VP in charge of external relations and director responsible for the Mediterrranean and Arab world.

For the past 10 years he has focused more on global environmental issues.

He also gives a course on economic policy at the "Mediterranean Academy for Diplomatic Studies" in Malta. He is the author of many articles on EU, Mediterranean and international subjects